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• Open Banking Security 101 : Is open banking safe ?

  3 décembre 2024, par Daniel Crough — Banking and Financial Services

  Open banking is changing the financial industry. Statista reports that open banking transactions hit $57 billion worldwide in 2023 and will likely reach $330 billion by 2027. According to ACI, global real-time payment (RTP) transactions are expected to exceed $575 billion by 2028.

  Open banking is changing how banking works, but is it safe ? And what are the data privacy and security implications for global financial service providers ?

  This post explains the essentials of open banking security and addresses critical data protection and compliance questions. We’ll explore how a privacy-first approach to data analytics can help you meet regulatory requirements, build customer trust and ultimately thrive in the open banking market while offering innovative financial products.

   

  

  

  EU Financial Services Analytics Maturity Report

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  Download the report now

  What is open banking ?

  Open banking is a system that connects banks, authorised third-party providers and technology, empowering customers to securely share their financial data with other companies. At the same time, it unlocks access to more innovative and personalised financial products and services like spend management solutions, tailored budgeting apps and more convenient payment gateways. 

  With open banking, consumers have greater choice and control over their financial data, ultimately fostering a more competitive financial industry, supporting technological innovation and paving the way for a more customer-centric financial future.

  Imagine offering your clients a service that analyses spending habits across all accounts — no matter the institution — and automatically finds ways to save them money. Envision providing personalised financial advice tailored to individual needs or enabling customers to apply for a mortgage with just a few taps on their phone. That’s the power of open banking.

  Embracing this technology is an opportunity for banks and fintech companies to build new solutions for customers who are eager for a more transparent and personalised digital experience.

  How is open banking different from traditional banking ?

  In traditional banking, consumers’ financial data is locked away and siloed within each bank’s systems, accessible only to the bank and the account holder. While account holders could manually aggregate and share this data, the process is cumbersome and prone to errors.

  With open banking, users can choose what data to share and with whom, allowing trusted third-party providers to access their financial information directly from the source. 

  

  How does open banking work ?

  The technology that makes open banking possible is the application programming interface (API). Think of banking APIs as digital translators for different software systems ; instead of translating languages, they translate data and code.

  The bank creates and publishes APIs that provide secure access to specific types of customer data, like credit card transaction history and account balances. The open banking API acts like a friendly librarian, ready to assist apps in accessing the information they need in a secure and organised way.

  Third-party providers, like fintech companies, use these APIs to build their applications and services. Some tech companies also act as intermediaries between fintechs and banks to simplify connections to multiple APIs simultaneously.

  For example, banks like BBVA (Spain) and Capital One (USA) offer secure API platforms. Fintechs like Plaid and TrueLayer use those banking APIs as a bridge to users’ financial data. This bridge gives other service providers like Venmo, Robinhood and Coinbase access to customer data, allowing them to offer new payment gateways and investment tools that traditional banks don’t provide.

  Is open banking safe for global financial services ?

  Yes, open banking is designed from the ground up to be safe for global financial services.

  Open banking doesn’t make customer financial data publicly available. Instead, it uses a secure, regulated framework for sharing information. This framework relies on strong security measures and regulatory oversight to protect user data and ensure responsible access by authorised third-party providers.

  In the following sections, we’ll explore the key security features and banking regulations that make this technology safe and reliable.

  Regulatory compliance in open banking

  Regulatory oversight is a cornerstone of open banking security.

  In the UK and the EU, strict regulations govern how companies access and use customer data. The revised Payment Services Directive (PSD2) in Europe mandates strong customer authentication and secure communication, promoting a high level of security for open banking services.

  To offer open banking services, companies must register with their respective regulatory bodies and comply with all applicable data protection laws.

  For example, third-party service providers in the UK must be authorised by the Financial Conduct Authority (FCA) and listed on the Financial Services Register. Depending on the service they provide, they must get an Account Information Service Provider (AISP) or a Payment Initiation Service Provider (PISP) license.

  Similar regulations and registries exist across Europe, enforced by the European National Competent Authority, like BaFin in Germany and the ACPR in France.

  In the United States, open banking providers don’t require a special federal license. However, this will soon change, as the U.S. Consumer Financial Protection Bureau (CFPB) unveiled a series of rules on 22 October 2024 to establish a regulatory framework for open banking.

  These regulations ensure that only trusted providers can participate in the open banking ecosystem. Anyone can check if a company is a trusted provider on public databases like the Regulated Providers registry on openbanking.org.uk. While being registered doesn’t guarantee fair play, it adds a layer of safety for consumers and banks.

  Key open banking security features that make it safe for global financial services

  Open banking is built on a foundation of solid security measures. Let’s explore five key features that make it safe and reliable for financial institutions and their customers.

  

  Strong Customer Authentication (SCA)

  Strong Customer Authentication (SCA) is a security principle that protects against unauthorised access to user financial data. It’s a regulated and legally required form of multi-factor authentication (MFA) within the European Economic Area.

  SCA mandates that users verify their identity using at least two of the following three factors :

  • Something they know (a password, PIN, security question, etc.)
  • Something they have (a mobile phone, a hardware token or a bank card)
  • Something they are (a fingerprint, facial recognition or voice recognition)

  This type of authentication helps reduce the risk of fraud and unauthorised transactions.

  API security

  PSD2 regulations mandate that banks provide open APIs, giving consumers the right to use any third-party service provider for their online banking services. According to McKinsey research, this has led to a surge in API adoption within the banking sector, with the largest banks allocating 14% of their IT budget to APIs. 

  To ensure API security, banks and financial service providers implement several measures, including :

  • API gateways, which act as a central point of control for all API traffic, enforcing security policies and preventing unauthorised access
  • API keys and tokens to authenticate and authorise API requests (the equivalent of a library card for apps)
  • Rate limiting to prevent denial-of-service attacks by limiting the number of requests a third-party application can make within a specific timeframe
  • Regular security audits and penetration testing to identify and address potential vulnerabilities in the API infrastructure

  Data minimisation and purpose limitation

  Data minimisation and purpose limitation are fundamental principles of data protection that contribute significantly to open banking safety.

  Data minimisation means third parties will collect and process only the data necessary to provide their service. Purpose limitation requires them to use the collected data only for its original purpose.

  For example, a budgeting app that helps users track their spending only needs access to transaction history and account balances. It doesn’t need access to the user’s full transaction details, investment portfolio or loan applications.

  Limiting the data collected from individual banks significantly reduces the risk of potential misuse or exposure in a data breach.

  Encryption

  Encryption is a security method that protects data in transit and at rest. It scrambles data into an unreadable format, making it useless to anyone without the decryption key.

  In open banking, encryption protects users’ data as it travels between the bank and the third-party provider’s systems via the API. It also protects data stored on the bank’s and the provider’s servers. Encryption ensures that even if a breach occurs, user data remains confidential.

  Explicit consent

  In open banking, before a third-party provider can access user data, it must first inform the user what data it will pull and why. The customer must then give their explicit consent to the third party collecting and processing that data.

  This transparency and control are essential for building trust and ensuring customers feel safe using third-party services.

  But beyond that, from the bank’s perspective, explicit customer consent is also vital for compliance with GDPR and other data protection regulations. It can also help limit the bank’s liability in case of a data breach.

  Explicit consent goes beyond sharing financial data. It’s also part of new data privacy regulations around tracking user behaviour online. This is where an ethical web analytics solution like Matomo can be invaluable. Matomo fully complies with some of the world’s strictest privacy regulations, like GDPR, lGPD and HIPAA. With Matomo, you get peace of mind knowing you can continue gathering valuable insights to improve your services and user experience while respecting user privacy and adhering to regulations.

  Risks of open banking for global financial services

  While open banking offers significant benefits, it’s crucial to acknowledge the associated risks. Understanding these risks allows financial institutions to implement safeguards and protect themselves and their customers.

  

  Risk of data breaches

  By its nature, open banking is like adding more doors and windows to your house. It’s convenient but also gives burglars more ways to break in.

  Open banking increases what cybersecurity professionals call the “attack surface,” or the number of potential points of vulnerability for hackers to steal financial data.

  Data breaches are a serious threat to banks and financial institutions. According to IBM’s 2024 Cost of a Data Breach Report, each breach costs companies in the US an average of $4.88 million. Therefore, banks and fintechs must prioritise strong security measures and data protection protocols to mitigate these risks.

  Risk of third-party access

  By definition, open banking involves granting third-party providers access to customer financial information. This introduces a level of risk outside the bank’s direct control.

  Financial institutions must carefully vet third-party providers, ensuring they meet stringent security standards and comply with all relevant data protection regulations.

  Risk of user account takeover

  Open banking can increase the risk of user account takeover if adequate security measures are not in place. For example, if a malicious third-party provider gains unauthorised access to a user’s bank login details, they could take control of the user’s account and make fraudulent bank transactions.

  A proactive approach to security, continuous monitoring and a commitment to evolving best practices and security protocols are crucial for navigating the open banking landscape.

  Open banking and data analytics : A balancing act for financial institutions

  The additional data exchanged through open banking unveils deeper insights into customer behaviour and preferences. This data can fuel innovation, enabling the development of personalised products and services and improved risk management strategies.

  However, using this data responsibly requires a careful balancing act.

  Too much reliance on data without proper safeguards can erode trust and invite regulatory issues. The opposite can stifle innovation and limit the technology’s potential.

  Matomo Analytics derisks web and app environments by giving full control over what data is tracked and how it is stored. The platform prioritises user data privacy and security while providing valuable data and analytics that will be familiar to anyone who has used Google Analytics.

  Open banking, data privacy and AI

  The future of open banking is entangled with emerging technologies like artificial intelligence (AI) and machine learning. These technologies significantly enhance open banking analytics, personalise services, and automate financial tasks.

  Several banks, credit unions and financial service providers are already exploring AI’s potential in open banking. For example, HSBC developed the AI-enabled FX Prompt in 2023 to improve forex trading. The bank processed 823 million client API calls, many of which were open banking.

  However, using AI in open banking raises important data privacy considerations. As the American Bar Association highlights, balancing personalisation with responsible AI use is crucial for open banking’s future. Financial institutions must ensure that AI-driven solutions are developed and implemented ethically, respecting customer privacy and data protection.

  Conclusion

  Open banking presents a significant opportunity for innovation and growth in the financial services industry. While it’s important to acknowledge the associated risks, security measures like explicit customer consent, encryption and regulatory frameworks make open banking a safe and reliable system for banks and their clients.

  Financial service providers must adopt a multifaceted approach to data privacy, implementing privacy-centred solutions across all aspects of their business, from open banking to online services and web analytics.

  By prioritising data privacy and security, financial institutions can build customer trust, unlock the full potential of open banking and thrive in today’s changing financial environment.

• How to Choose the Optimal Multi-Touch Attribution Model for Your Organisation

  13 mars 2023, par Erin — Analytics Tips

  If you struggle to connect the dots on your customer journeys, you are researching the correct solution. 

  Multi-channel attribution models allow you to better understand the users’ paths to conversion and identify key channels and marketing assets that assist them.

  That said, each attribution model has inherent limitations, which make the selection process even harder.

  This guide explains how to choose the optimal multi-touch attribution model. We cover the pros and cons of popular attribution models, main evaluation criteria and how-to instructions for model implementation. 

  Pros and Cons of Different Attribution Models 

  

  First Interaction 

  First Interaction attribution model (also known as first touch) assigns full credit to the conversion to the first channel, which brought in a lead. However, it doesn’t report other interactions the visitor had before converting.

  Marketers, who are primarily focused on demand generation and user acquisition, find the first touch attribution model useful to evaluate and optimise top-of-the-funnel (ToFU). 

  Pros 

  • Reflects the start of the customer journey
  • Shows channels that bring in the best-qualified leads 
  • Helps track brand awareness campaigns

  Cons 

  • Ignores the impact of later interactions at the middle and bottom of the funnel 
  • Doesn’t provide a full picture of users’ decision-making process 

  Last Interaction 

  Last Interaction attribution model (also known as last touch) shifts the entire credit allocation to the last channel before conversion. But it doesn’t account for the contribution of all other channels. 

  If your focus is conversion optimization, the last-touch model helps you determine which channels, assets or campaigns seal the deal for the prospect. 

  Pros 

  • Reports bottom-of-the-funnel events
  • Requires minimal data and configurations 
  • Helps estimate cost-per-lead or cost-per-acquisition

  Cons 

  • No visibility into assisted conversions and prior visitor interactions 
  • Overemphasise the importance of the last channel (which can often be direct traffic) 

  Last Non-Direct Interaction 

  Last Non-Direct attribution excludes direct traffic from the calculation and assigns the full conversion credit to the preceding channel. For example, a paid ad will receive 100% of credit for conversion if a visitor goes directly to your website to buy a product. 

  Last Non-Direct attribution provides greater clarity into the bottom-of-the-funnel (BoFU). events. Yet, it still under-reports the role other channels played in conversion. 

  Pros 

  • Improved channel visibility, compared to Last-Touch 
  • Avoids over-valuing direct visits
  • Reports on lead-generation efforts

  Cons 

  • Doesn’t work for account-based marketing (ABM) 
  • Devalues the quality over quantity of leads 

  Linear Model

  Linear attribution model assigns equal credit for a conversion to all tracked touchpoints, regardless of their impact on the visitor’s decision to convert.

  It helps you understand the full conversion path. But this model doesn’t distinguish between the importance of lead generation activities versus nurturing touches.

  Pros 

  • Focuses on all touch points associated with a conversion 
  • Reflects more steps in the customer journey 
  • Helps analyse longer sales cycles

  Cons 

  • Doesn’t accurately reflect the varying roles of each touchpoint 
  • Can dilute the credit if too many touchpoints are involved 

  Time Decay Model 

  Time decay models assumes that the closer a touchpoint is to the conversion, the greater its influence. Pre-conversion touchpoints get the highest credit, while the first ones are ranked lower (5%-5%-10%-15%-25%-30%).

  This model better reflects real-life customer journeys. However, it devalues the impact of brand awareness and demand-generation campaigns. 

  Pros 

  • Helps track longer sales cycles and reports on each touchpoint involved 
  • Allows customising the half-life of decay to improve reporting 
  • Promotes conversion optimization at BoFu stages

  Cons 

  • Can prompt marketers to curtail ToFU spending, which would translate to fewer qualified leads at lower stages
  • Doesn’t reflect highly-influential events at earlier stages (e.g., a product demo request or free account registration, which didn’t immediately lead to conversion)

  Position-Based Model 

  Position-Based attribution model (also known as the U-shaped model) allocates the biggest credit to the first and the last interaction (40% each). Then distributes the remaining 20% across other touches. 

  For many marketers, that’s the preferred multi-touch attribution model as it allows optimising both ToFU and BoFU channels. 

  Pros 

  • Helps establish the main channels for lead generation and conversion
  • Adds extra layers of visibility, compared to first- and last-touch attribution models 
  • Promotes budget allocation toward the most strategic touchpoints

  Cons 

  • Diminishes the importance of lead nurturing activities as more credit gets assigned to demand-gen and conversion-generation channels
  • Limited flexibility since it always assigns a fixed amount of credit to the first and last touchpoints, and the remaining credit is divided evenly among the other touchpoints

  How to Choose the Right Multi-Touch Attribution Model For Your Business 

  If you’re deciding which attribution model is best for your business, prepare for a heated discussion. Each one has its trade-offs as it emphasises or devalues the role of different channels and marketing activities.

  To reach a consensus, the best strategy is to evaluate each model against three criteria : Your marketing objectives, sales cycle length and data availability. 

  Marketing Objectives 

  Businesses generate revenue in many ways : Through direct sales, subscriptions, referral fees, licensing agreements, one-off or retainer services. Or any combination of these activities. 

  In each case, your marketing strategy will look different. For example, SaaS and direct-to-consumer (DTC) eCommerce brands have to maximise both demand generation and conversion rates. In contrast, a B2B cybersecurity consulting firm is more interested in attracting qualified leads (as opposed to any type of traffic) and progressively nurturing them towards a big-ticket purchase. 

  When selecting a multi-touch attribution model, prioritise your objectives first. Create a simple scoreboard, where your team ranks various channels and campaign types you rely on to close sales. 

  Alternatively, you can survey your customers to learn how they first heard about your company and what eventually triggered their conversion. Having data from both sides can help you cross-validate your assumptions and eliminate some biases. 

  Then consider which model would best reflect the role and importance of different channels in your sales cycle. Speaking of which….

  Sales Cycle Length 

  As shoppers, we spend less time deciding on a new toothpaste brand versus contemplating a new IT system purchase. Factors like industry, business model (B2C, DTC, B2B, B2BC), and deal size determine the average cycle length in your industry. 

  Statistically, low-ticket B2C sales can happen within just several interactions. The average B2B decision-making process can have over 15 steps, spread over several months. 

  That’s why not all multi-touch attribution models work equally well for each business. Time-decay suits better B2B companies, while B2C usually go for position-based or linear attribution. 

  Data Availability 

  Businesses struggle with multi-touch attribution model implementation due to incomplete analytics data. 

  Our web analytics tool captures more data than Google Analytics. That’s because we rely on a privacy-focused tracking mechanism, which allows you to collect analytics without showing a cookie consent banner in markets outside of Germany and the UK. 

  Cookie consent banners are mandatory with Google Analytics. Yet, almost 40% of global consumers reject it. This results in gaps in your analytics and subsequent inconsistencies in multi-touch attribution reports. With Matomo, you can compliantly collect more data for accurate reporting. 

  Some companies also struggle to connect collected insights to individual shoppers. With Matomo, you can cross-attribute users across browning sessions, using our visitors’ tracking feature. 

  When you already know a user’s identifier (e.g., full name or email address), you can track their on-site behaviours over time to better understand how they interact with your content and complete their purchases. Quick disclaimer, though, visitors’ tracking may not be considered compliant with certain data privacy laws. Please consult with a local authority if you have doubts. 

  How to Implement Multi-Touch Attribution

  Multi-touch attribution modelling implementation is like a “seek and find” game. You have to identify all significant touchpoints in your customers’ journeys. And sometimes also brainstorm new ways to uncover the missing parts. Then figure out the best way to track users’ actions at those stages (aka do conversion and events tracking). 

  Here’s a step-by-step walkthrough to help you get started. 

  Select a Multi-Touch Attribution Tool 

  The global marketing attribution software is worth $3.1 billion. Meaning there are plenty of tools, differing in terms of accuracy, sophistication and price.

  To make the right call prioritise five factors :

  • Available models : Look for a solution that offers multiple options and allows you to experiment with different modelling techniques or develop custom models. 
  • Implementation complexity : Some providers offer advanced data modelling tools for creating custom multi-touch attribution models, but offer few out-of-the-box modelling options. 
  • Accuracy : Check if the shortlisted tool collects the type of data you need. Prioritise providers who are less dependent on third-party cookies and allow you to identify repeat users. 
  • Your marketing stack : Some marketing attribution tools come with useful add-ons such as tag manager, heatmaps, form analytics, user session recordings and A/B testing tools. This means you can collect more data for multi-channel modelling with them instead of investing in extra software. 
  • Compliance : Ensure that the selected multi-attribution analytics software wouldn’t put you at risk of GDPR non-compliance when it comes to user privacy and consent to tracking/analysis. 

  Finally, evaluate the adoption costs. Free multi-channel analytics tools come with data quality and consistency trade-offs. Premium attribution tools may have “hidden” licensing costs and bill you for extra data integrations. 

  Look for a tool that offers a good price-to-value ratio (i.e., one that offers extra perks for a transparent price). 

  Set Up Proper Data Collection 

  Multi-touch attribution requires ample user data. To collect the right type of insights you need to set up : 

  • Website analytics : Ensure that you have all tracking codes installed (and working correctly !) to capture pageviews, on-site actions, referral sources and other data points around what users do on page. 
  • Tags : Add tracking parameters to monitor different referral channels (e.g., “facebook”), campaign types (e.g., ”final-sale”), and creative assets (e.g., “banner-1”). Tags help you get a clearer picture of different touchpoints. 
  • Integrations : To better identify on-site users and track their actions, you can also populate your attribution tool with data from your other tools – CRM system, A/B testing app, etc. 

  Finally, think about the ideal lookback window — a bounded time frame you’ll use to calculate conversions. For example, Matomo has a default windows of 7, 30 or 90 days. But you can configure a custom period to better reflect your average sales cycle. For instance, if you’re selling makeup, a shorter window could yield better results. But if you’re selling CRM software for the manufacturing industry, consider extending it.

  Configure Goals and Events 

  Goals indicate your main marketing objectives — more traffic, conversions and sales. In web analytics tools, you can measure these by tracking specific user behaviours. 

  For example : If your goal is lead generation, you can track :

  • Newsletter sign ups 
  • Product demo requests 
  • Gated content downloads 
  • Free trial account registration 
  • Contact form submission 
  • On-site call bookings 

  In each case, you can set up a unique tag to monitor these types of requests. Then analyse conversion rates — the percentage of users who have successfully completed the action. 

  To collect sufficient data for multi-channel attribution modelling, set up Goal Tracking for different types of touchpoints (MoFU & BoFU) and asset types (contact forms, downloadable assets, etc). 

  Your next task is to figure out how users interact with different on-site assets. That’s when Event Tracking comes in handy. 

  Event Tracking reports notify you about specific actions users take on your website. With Matomo Event Tracking, you can monitor where people click on your website, on which pages they click newsletter subscription links, or when they try to interact with static content elements (e.g., a non-clickable banner). 

  Using in-depth user behavioural reports, you can better understand which assets play a key role in the average customer journey. Using this data, you can localise “leaks” in your sales funnel and fix them to increase conversion rates.

  Test and Validated the Selected Model 

  A common challenge of multi-channel attribution modelling is determining the correct correlation and causality between exposure to touchpoints and purchases. 

  For example, a user who bought a discounted product from a Facebook ad would act differently than someone who purchased a full-priced product via a newsletter link. Their rate of pre- and post-sales exposure will also differ a lot — and your attribution model may not always accurately capture that. 

  That’s why you have to continuously test and tweak the selected model type. The best approach for that is lift analysis. 

  Lift analysis means comparing how your key metrics (e.g., revenue or conversion rates) change among users who were exposed to a certain campaign versus a control group. 

  In the case of multi-touch attribution modelling, you have to monitor how your metrics change after you’ve acted on the model recommendations (e.g., invested more in a well-performing referral channel or tried a new brand awareness Twitter ad). Compare the before and after ROI. If you see a positive dynamic, your model works great. 

  The downside of this approach is that you have to invest a lot upfront. But if your goal is to create a trustworthy attribution model, the best way to validate is to act on its suggestions and then test them against past results. 

  Conclusion

  A multi-touch attribution model helps you measure the impact of different channels, campaign types, and marketing assets on metrics that matter — conversion rate, sales volumes and ROI. 

  Using this data, you can invest budgets into the best-performing channels and confidently experiment with new campaign types. 

  As a Matomo user, you also get to do so without breaching customers’ privacy or compromising on analytics accuracy.

  Start using accurate multi-channel attribution in Matomo. Get your free 21-day trial now. No credit card required.

• Revision 37457 : en étant moins verbeux c’est mieux

  20 avril 2010, par kent1@… — Log

  en étant moins verbeux c’est mieux